F1-Student on scholarship - how to file

Hello,
My daughter is currently a student in the US on a full scholarship. She has been trying to get a W-2 but her institution said they do not have one for her. She has been to tax seminars on campus and they tell her if she has no forms, she doesnt have to file.

We feel that she must file as her living expenses should be qualified as income. But how does she report this? Also, if she does have to report this income, is it exempt due to US/Canada treaty?

Thank you for all your help

Scholarships are reported on form 1098-T, not a W-2. That's the form she should be requesting to file her US return.

Last year, she received a W2 for scholarship payment for her living expenses (room and board). For some reason, she did not receive one this year.
what should we do?

It does sound as though she should be getting something, not a W-2 but she's receiving a benefit so as a non-resident alien I would have thought it was a 1042-S unless there's some weird NRA alternative to the 1098 form.

She doesn't actually need the form, she can declare it anyway without one on 1040NR. It does say in the instructions a statement from the college can be used in lieu of a 1042-S. So has she got a written statement on how much the benefits to her where?

There may be tax treaty provisions that come into play here, but this is a fairly esoteric source of income, I'm not familiar with the specific provisions.

The one I am familiar with is that students must file a 1040NR every year with an 8843. Among other things this exempts them from FICA withholding.

Read the instructions for 1040NR and there is also more information in IRS publication 519.

Thanks, Steve
I appreciate your information.

Hi,
I am a Canadian citizen currently in the US on an F1 Visa. I am on a scholarship and so I have been filing tax returns in both Canada and US for the past 3 years.

This past summer, I worked for a US company in the US on an OPT and made under $10,000. As I am a "non-resident alien" they did not deduct FICA. This is my only taxable income this year (as my tuition scholarship is not taxable).

When I file in the US for 2010, do I claim the tax treaty? And what implications does this have when I file my Canadian taxes?

Thank you

There is nothing in the tax treaty to claim. You are non-resident of US, but the incoem is US-sourced, so you need to file a 1040NR and pay whatever US tax that calls for (plus state return).

In Canada you report the income and use whatever US and state taxes as a credit.
Your employer was correct not to deduct Fica. You should pay CPP instead on your Cdn return.

I have a new question. My daughter is a student on an F1 Visa. Last summer, she made $9000.00 on a CPT internship in the US.
I have been told she must file her US tax return and then invoke the US/Canada treaty and should receive most of her withhold back. As she is a NR Alien, her employer did not deduct FICA.

She then must file the US income on her Canadian tax return.

I am told this is better for her as on a Canadian tax return she is eligible for the basic deduction, but in the US, as she is a NR alien, she is not eligible for the US basic deduction.

Does this sound correct?
Thank you

Its not a treaty issue. Her CPT income is US-sourced, and she is non-resident. Her scholarship income is also US-sourced. So, she reports the income on a 1040NR and calculates her tax.

She then reports that income on her regular Cdn return, as normal, and gets to use whatever credits deductions etc, plus any tax she calculated on her IRS and state return as a foreign tax credit.

Nothing to "invoke" treaty-wise.